Project Selection and the Equity Objective: The Use of Social Analysis

Recent developments in the methodology of social cost -benefit analysis (SCBA) have centred on the use of weights to revalue the income flows created by projects. These developments reflect the increased concern expressed by many governments in the less developed countries (LDCs) about the problems of the lowest income groups, and are an attempt to show how the objective of greater equity in income distribution can be incorporated, in addition to other more conventional objectives, in the appraisal of projects. 1ltis paper discusses the use of income weights in the light of the results of a more detailed study on SCBA in Pakistan by the author [I]. The paper is divided into three sections: the first analyses the different ways in which a weighting system can be incorporated into the appraisal of projects; the second discusses the problem of obtaining values for these weights and suggests a relatively simple approach which can be applied in Pakistan; and, finally, the third section discusses the practical significance of such procedures for decision -taking in the LDCs.